Study On Value Relevance Of Intangible Assets In Information Technology Industry Under The New Standards

With the knowledge economy booming, the proportion of intangible assets contained in the products and labor service increases continuously. The role of intangible assets in social economic activities protrudes. Thereby, intangible assets become a decisive factor for value creation. This paper, based on the previous studies related to the value of intangible assets, studies the mechanism of the value relevance of the intangible assets and the factors that may influence the value relevance of the intangible assets from the theoretical perspective. The factors mainly consist of change of the accounting standard of the intangible assets, the industry to which the corporation belongs and so on. Thus, this paper, taking2009-2011during which the new accounting standards of intangible assets were implemented as the temporal interval and taking listed companies in information technology industry where intangible assets are relatively intensive as the object study, studies the value relevance of the intangible assets and categorizes intangible assets to study whether all kinds of the intangible assets have value relevance and whether different strengths exist among the value relevance.Then, this paper conducts research on how the change of accounting standards of the intangible assets influences the value relevance of the intangible assets. By analyzing the damages that the old standards caused to the value relevance of the intangible assets and the improvement of the new standards, the paper forecasts that the change of the standards can improve the value relevance of the intangible assets. Then, from the point of accounting treatment about the research and development expenditure, this paper respectively establishes capitalization groups in accordance with the new standards and expenditure groups in accordance with the old standards to do empirical research. By comparing the value relevance of the two groups, we can obtain the results. The conclusions of the research are as the follows:(1) In2009-2011, the investments of the intangible assets of the listed companies in information technology industry, whether the gross or the growth rate, increase continually. However, the proportion of the intangible assets in the total assets is still low. And compared with the permanent assets, intangible assets are far behind. With further analysis, the study also finds that the disclosure of the intangible assets is not standard and comprehensive and is more random. Among them, right-based intangible assets with low gold content take large proportion. And purchased software with low gold content accounts for large apart in technology-based intangible assets. So the gold content of intangible assets in its internal structure is generally low.(2) All kinds of the intangible assets make different contributions to the income from main operation of the listed companies in information technology industry. Intangible assets of right class have negative correlation with the income from main operation. That is to say, increase of the intangible assets of right class may reduce the income from main operation. The intangible assets of right class and intangible assets of other classes have positive correlation with the income from main operation, though that is not obvious in statistics. This has something with the low golden content in the inner composition of the intangible assets, which hinders the intangible assets, especially the intangible assets of technical class, to play the expected role. What’s more, there are no explicit standards for the categorization of the intangible assets. And putting the specific technology with high golden content and the outsourcing software with low golden content is likely to cause the reliability of the results to be low.(3) All kinds of the intangible assets have made contributions to the share prices of the listed companies in information technology industry positively. Intangible assets of technical class have positive correlation with the share prices, while the positive influence of the intangible assets of right class and other classes is not obvious, which shows that intangible assets of technical class can promote the current share prices obviously.(4) Securities market in China have positive price response to the intangible assets, which shows that the investors take advantage of the information of the intangible assets and consider them as valuable property which can lead the increase of the corporation values.(5) By contrasting the capitalization group and the expenditure group empirically, the study finds that the adjusted R square of capitalization group is really bigger than the expenditure groups. This explains that the change of the new standards improve the value relevance of the intangible assets accounting information. The improvement of the new standards is reasonable.Based on the study, the paper proposes the following suggestions:(1) Enhancing the management of the intangible assets in value creation of the corporation. The enterprises should strengthen the awareness of intangible asset management and reinforce the investment, so as to explore the value creation potential of intangible assets.(2) Perfecting the accounting standards of the intangible assets in China ceaselessly.(3) Perfecting relevant law and regulation of the intangible assets, reinforcing the law enforcement efforts and enhancing the protection for the intangible assets.The innovations of this research are:(1) The paper studies the relation between the intangible assets and the value creation of the enterprises from the theoretical point. First, the study analyzes the value agents of the intangible assets from the aspects of value driving and value restraint of the intangible assets. Then, the paper studies the mechanism of how the intangible assets affect the contribution of the value creation. As last, the paper analyzes the relevant factors that have impact on the intangible assets values, which provides theoretical basis for the following empirical studies.(2) By reading the financial statement and the annotations of the listed companies and exploring the up-to-date intangible asset information of the listed companies deeply, the studies obtains all sorts of data related to intangible assets, including the research and development expenditure, which provides favorable data for the contrasting analysis and empirical analysis.(3) By studying how the capitalization and expenditure of the research and development expenditures influence the listed companies in information technology industry empirically, the paper reaches a conclusion that the new standard changes in the accounting of the R&D expenditure improve the usefulness of accounting information.Although the study has achieved some results, there are still some limitations:(1) All the data of the intangible assets related to the study were obtained by browsing the financial statement and the annotations of the listed companies personally. So it is unavoidable that some errors may occur in the course of getting the data.(2) Measuring index for outstanding achievements is limited. The study only chooses the income from main operation as the outstanding achievement index. The future studies can expand outstanding achievement index and employ more financial indexes to the studies, which can help people learn and study the value relevance of the intangible assets.